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India to launch gas trading hub

Press Trust of India  |  New Delhi 

The government plans to launch a trading hub by October, creating an Indian which will spark a surge in consumption of the cleaner-burning fuel.

Oil regulator PNGRB has sought bids to hire a to help develop a regulatory framework for operationalising the

"In order to further boost the consumption of in the country, Government is considering the establishment of a / Exchange (GTHE), where can be traded, and supplied through a market-based mechanism instead of multiple formula driven prices," PNGRB said in the tender floated for hiring the

Currently, the government fixes the price of the bulk of domestically produced natural gas. The rate, arrived at using price prevalent in of US, Canada, UK, and Russia, is USD 3.06 per million British thermal unit for six month period beginning April 1.

In comparison, the cost of imported LNG into is around USD 7.5.

"The Government has envisaged ushering into a by increasing the share of natural gas in the primary of the country from current level of about 6 per cent to 15 per cent by 2030," PNGRB said.

For this, the thrust is on increasing the availability of natural gas by enhancing the domestic production, encouraging the import of (LNG), completion of national pipeline grid and speedier roll out of City Gas Distribution network in the country.

The (PNGRB) said the has asked it to initiate steps for framing of necessary regulatory framework to enable the establishment and operation of a GTHE.

The regulator said it wants to hire a consultancy firm to provide assistance in carrying out a detailed study on various pre-requisites.

PNGRB would visit USA, UK, and Australia, where the is successfully operating, to decide if there is a need to amend existing regulations.

The target for launch of the has been set for October. A hub is used as a central pricing point for a network that could aid better price discovery for domestic as well as imported gas.

It isn't clear if the government would abandon fixing the and allow the rates to be discovered on the hub.

is not only country launching trading hub. plans to launch a in this year.

The world's biggest is the Henry Hub in the US state of Gas delivered at this point is the basis of most US Aiding Henry Hub is vast domestic production and consumption as well as the world's biggest and most freely accessible pipeline network, which stretches into and

Britain has National Balancing Point (NBP) as the

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, April 16 2018. 14:15 IST